Natural gas is a flexible and defensive industry. The main reasons are as follows: 1) As the "blood of industry", the demand for industrial gas is continuous, and there are many downstream industries, including iron and steel metallurgy, chemical industry, food and medical treatment, which occupy an important position in the national economy and are typical defensive industries; 2) The operation mode of industrial gas has the excellent characteristics of "attacking in advance and defending in retreat". The long-term agreement of 15-30 years provides stable cash flow for large-scale customers, which is beneficial to the demand of small-scale customers in the economic boom, and the retail volume and price rise together, providing flexibility. 3) From the financial point of view, facing the same gas supply demand, the cash flow value of industrial gas business is generally greater than that of only providing air separation equipment under the premise of continuous operation of customers. At the same time, the growth path of the "Big Four" industrial gas giants who started from manufacturing air separation equipment and then transformed into industrial gas suppliers in the post-industrial era in Europe and America also proved that industrial gas supply is a good business, which is the business of giant companies with potential market value of hundreds of billions of dollars. Business model: Long-term contracts provide relatively stable cash flow, while retail gas provides flexible performance. The essence of industrial gas production is to separate and purify helium, oxygen, nitrogen and other gases in the air. Therefore, the core of industrial gas preparation is air separation equipment, and its core components include turbine compressor and plate-fin heat exchanger. The raw materials for industrial gas manufacturing are air and electricity. According to the survey, the electricity cost accounts for about 80% of the manufacturing cost. Various gases are separated by air separation equipment and stored and transported by pipelines, tankers or gas cylinders.
The preparation of industrial gas is mainly divided into two ways: self-built device gas supply and outsourcing to a third party gas supply. The business model corresponding to self-built equipment gas supply is that customers buy air separation equipment from air separation equipment manufacturers and transport them to the proposed base, and contract the base construction to a third party. The engineer and the air separation equipment supplier can be the same or both. The customer owns the heavy asset of air separation equipment and bears the profit and loss of the air separation equipment base. The business model of third-party outsourcing gas supply is that customers buy gas directly from third-party gas suppliers according to quantity and price. If a large amount of gas is needed, an air separation base needs to be built nearby, so the air separation equipment belongs to the gas supplier, who is responsible for the construction and operation of the base. The industrial gas business we analyzed actually refers to the business of third-party gas suppliers in outsourcing gas supply business.
Natural gas sales business is usually based on field gas production projects. Due to the difficulty of gas transportation, large petrochemical, chemical, steel and other factories with large demand for industrial gas will choose to build air separation equipment nearby to provide a continuous gas source for industrial gas. Therefore, the gas supplier will first set up a subsidiary or base in the local area of the project based on the on-site gas production project to install and operate the air separation equipment. By signing long-term gas supply contracts with major customers ranging from 15 to 30 years, stable cash flow can be provided and the basic investment return of on-site gas production projects can be obtained.